How do we Need to Attack the Fraud Losses as They Arise and Rise?

corporate fraud prevention

Increasing fraud losses are one of the main concerns of most of the organizations worldwide. But if we take care of some points then we can minimize such fraud losses. I am mentioning some important points to minimize such fraud losses in any organization.

  1. Ensure that management are fully behind the need to address the problems and prepared to invest in the solutions even if they will take more than a few months to see pay-back. Often the payback for these things is a matter of weeks, because left without a solution the fraud rises exponentially. We often need to invest to prevent this….. again.
  1. Make sure that the problem is being measured; and any which way. There is no point in investing in a ramped up a POS identity validation or rule-sets in a solution if the problem is in the e-commerce field, and equally little point in spending money on a overseas issue or a portfolio review if we do not identify our new customers properly. So we need to measure the problem to focus our attentions on the solutions needed, but also to ensure that the right management can see the trends and start demanding the right investment in the right direction.
  1. Often we see such problems where there is investment and there is measurement and management, but no-one on the board is responsible i.e. has ‘ownership’ of the rising losses that start to kill the profitability. Someone has to be responsible and someone’s head has to be about to roll if they do not get addressed. And if someone does own the problem, usually they take action and make sure that the right things happen. Hopefully.
  1. Lastly, if the culture is not there, things suffer and fraud goes up and up and up. People have to be hungry to find the liars and cheats and attack them. People have to demand immediate action and take the fight to the crooks and cheats, and we have to be hungry to address the IT challenges, rule corrections, falling staff levels, loss of focus in the management team. We also have to work as teams and both be able to deal with the problems as we find then, to LOOK for the problems that seem to underpin the problems but also to have the function in the business to PREVENT the next possible attacks.

Bill Trueman is a leading payment, risk & fraud expert who provide payment fraud prevention consultancy services to card issuers, banks, and business organizations worldwide. For more information one can visit website at RiskSkill, apart from this Bill is also a permanent member of AIRFA.

European Union Initiates Reduced Inter-Regional Card Processing Fees

Kevin Smith, Riskskill: What does the inter-regional interchange fee rate picture look like today and where is it moving to?

 

Cards Inter-Regional Interchange Fees

The European Commission is the first competition authority to take action against Visa and Mastercard for their excessive inter-regional interchange fees. With its experience and successes in reducing intra-regional interchange fees in Europe, this latest action and its positive impacts has set an interesting precedent. It is great news. The European Commission move addresses both regulator and merchant concerns about the unfair and extreme costs of processing non-European cards.

Since 2015, domestic and intra-regional consumer card interchange rates within Europe have been driven down significantly. Although the end result of these fee reductions should have been passed through from merchants to customers, it is not clear how or if this has occurred. Recent Payment Systems Regulator (PSR) attention and their UK industry consultation has shown that the merchant service charge (MSC) also contains many other scheme fees, acquirer fees and margins.

And let’s not forget the myriad of other organisations in the transaction processing flow, providing their services and expecting their fees.

European regulatory attention and merchant concerns should not be a surprise. Not when typical consumer card interchange rates within Europe are now at just 0.20% (debit) and 0.30% (credit) – where they are 1.20% and up to 1.97% for equivalent inter-regional POS transactions in Europe.

Most merchants in Europe, have more domestic card payments than other European card payments; and only lastly non-EU card payments. On this basis, most European merchants, do not experience or notice the impact of accepting cards issued outside of Europe.

However, for many European merchants with lots of international customers, their cost of accepting cards is exaggerated by these disproportionately higher inter-regional interchange fees.

The wide gap between domestic and intra-Europe interchange costs and those for inter-regional transactions makes us ask what the different costs are for processing these transactions, i.e. are there really any greater risks or costs involved with the inter-regional transactions?

Based on the rhetoric use by the European Commission, Visa and Mastercard strangely, did not fight for the status quo, so quickly led to the agreement of new and reduced fees.

So what does the inter-regional interchange fee rate picture look like today and where is it moving to?

Figure 1: Card Present Transactions acquired in Europe

Face-to-Face / Card Present Transactions Inter-regional Interchange Fee – Today Inter-regional Interchange Fee – Pending
Visa Consumer Debit Between 1.10% and 1.97% 0.20%
Visa Consumer Credit 0.30%
Mastercard Consumer Debit Between 1.10% and 1.98% 0.20%
Mastercard Consumer Credit 0.30%

Figure 2: Card Not Present Transactions acquired in Europe

Online / Card Not Present Transactions Inter-regional Interchange Fee – Today Inter-regional Interchange Fee – Pending
Visa Consumer Debit Between 1.44% and 1.97% 1.15%
Visa Consumer Credit 1.50%
Mastercard Consumer Debit Between 1.44% and 1.98% 1.15%
Mastercard Consumer Credit 1.50%

The European Commission argued that this reduction: “will lead to lower prices for European retailers to do business, ultimately to the benefit of all consumers”.

For those merchants with higher card acceptance from outside of Europe, the European Commission believe that the cost savings could be 40%.

The European Commission decision does not raise important further questions about other payment scenarios:

a) Now that the parties have agreed lower inter-regional interchange rates, when will these revised fees come into force?

The European Commission states: “Under the commitments, Mastercard and Visa each undertake to reduce the current level of inter-regional interchange fees to or below the following binding caps, within six months:”

NB: the scheme commitments will apply for five years and six months from the above date.

But when does this six-month period begin?

  1. The date from the which the European Commission made the scheme commitments legally binding under EU antitrust rules, or
  2. Is it from the date communicated by each scheme to its respective client issuers and acquirers?
  3. Or as reported by the BBC UK website on 29th April 2019, i.e. on 19th October 2019 for five years.

Scheme updates posted following the European Commission press release confirm that the effective date for the inter-regional interchange alterations is indeed 19th October 2019.

b) What about inter-regional debit and credit cards in mail order and telephone order (MO/TO) in Europe?

The European Commission only refer to online payments. Can we assume that MO/TO transactions, though not specifically mentioned, are included in the European Commission definition of Card Not Present transactions?

Scheme updates posted following the European Commission press release confirm that Card Not Present transactions are all transactions other than card present transactions, so MO/TO transactions are included in the planned fee reduction.

c) A trustee will be appointed by the Commission to monitor the implementation of the commitments. Who will be monitored?

  1. Will they monitor Visa and Mastercard and whether they enforce the fee reductions in line with the agreement?
  2. Or will they monitor individual merchant acquirers and their agents to see if they deploy lower pricing within the agreed timeframe?
  3. Or will they monitor individual merchants to see if the lower costs lead to lower consumer prices?

d) How will EU card issuers justify and defend their continued receipt of higher interchange rates for card usage outside of Europe – i.e. the reverse of this agreement?

Will similar regulatory and merchant pressure outside of Europe lead to reduced interchange fee costs elsewhere and therefor reduced income for European issuers for non-EU based transactions?

As with previous interchange fee rate reductions, we should expect unexpected and unintended consequences?

e) If a South African-issued card accepted in Europe incurs the new lower interchange rate, what does that mean for the same card accepted in Australia or the US?

This is not a matter for the European Commission, but clearly, they will provide essential guidance and advice to other national payments and competition regulators around the globe to challenge Mastercard and Visa further.

International merchants with a presence in Europe and in other regions and countries around the world will increasingly question why they are incurring very different interchange fees across different regions and markets.

Is this the ‘beginning of the end’ for over-inflated and higher global inter-regional and local interchange rates?

f) What about the three-party model?

Inevitably, such schemes will be forced to revisit their merchant pricing to ensure any merchant preference or favour for such brands.

g) Will lower interchange fees, mean increases in other card processing fees?

In the UK most noticeably, and across the rest of Europe, we have witnessed that lower interchange rates have been offset by increases in acquirer pricing, such that the positive pricing effect does not pass through to the end customers.

Are we going to see a similar offset of inter-regional interchange fees with poorly explained increases in scheme fees for inter-regional transactions and corresponding acquirer processing fees?

h) What about non-EEA countries? The European Commission press release on 29th April 2019 states that the inter-regional interchange rate reduction will positively impact transactions acquired in EEA countries.

Effective April 2019, Visa no longer treats Israel, Switzerland and Turkey as part of their EEA market definition. This means that transactions into and out of these countries, for example the UK or US, are now treated as international for interchange purposes and scheme fee levels.

i) So what does this mean for commercial cards and any other programmes? These have been excluded from regulatory pressure on interchange reimbursement fee reductions.

Inter-regional commercial card transactions do remain a very small percentage of total card expenditure for many European merchants.

Commercial card interchange rates are typically between 0.20% and 2.10%.

Small Business, Commercial and Corporate Card Transactions Inter-regional Interchange Fee – Today
Visa Commercial Debit Between 0.20%+ GBP 0.01 (according to Visa Business Immediate Debit) and 2.00%
Visa Commercial Credit
Mastercard Commercial Debit Between 0.20% (according to Mastercard debit Government payments) and 2.10%
Mastercard Commercial Credit

So how long will it be before commercial debit and credit cards are included in the regulatory challenges to reduce interchange fees?

The changes and this agreement are all great news and positive developments, but the implications and implementation still need to be better understood and defined, and there remain many questions and some big issues there-in.

About Kevin Smith

With over 25 years in the payments business, Kevin is a trusted and experienced practitioner and thought leader in payments, technology, issuance, acceptance and acquiring. At Visa, Kevin headed acceptance and acquiring development and was instrumental for changing how Visa viewed payment acceptance, acquiring and retailers in Europe. Kevin also led fraud and compliance management functions at a senior level at Visa. Kevin has worked in retail management for a major UK retailer, and for a major UK high street bank in its retail banking cards and acquiring development business; in senior roles at Switch, the original UK domestic debit card scheme; as well as in Visa Europe and Visa International in the US.

About Riskskill

Riskskill is a leading Europe-based payments and risk management consultancy, with an impressive international track record of helping payments businesses to find and mitigate payments challenges and risks. The firm works with clients to put in place strategies and programmes of work to make payments businesses or functions more profitable, less susceptible to losses, risks and regulatory issues and compliance problems. Riskskill.com is a global GARS Reviewer for Visa and a member of AIRFA, the Association of Independent Fraud and Risk Advisors

For further information, please contact: Bill Trueman or Kevin Smith at www.riskskill.com and enquiries@riskskill.com

Card payments – Who am I dealing with? The parties involved are changing… again

Bill Trueman from Riskskill.com talks about who is involved in the four-party payment models and how and why these are changing

In four party models (those that involve Mastercard and Visa), include:

  • Cardholders – like us.
  • Merchants – the shops that we use, whether in the high-street or on-line.
  • Card Issuers: usually banks that provide us with the plastic-card, the CHIP, PIN and then our statements and customer services.
  • Merchant Acquirers: which provide the equipment to accept payments, but which also settle against the issuers globally through the card schemes and most importantly take the risks involved in doing so.

How these parties operate with one another is shown in figure 1 below. Contracts exist between each party, whether formal, OR

a) the sale of goods and services contract (in shop),
b) Visa and Mastercard rules and contracts – through which issuers and acquirers connect globally.

Base four-party model for Card Payments.png
Base four-party model for Card Payments

This is how the processes have worked in the past, but things are changing and getting increasingly complicated.

Newer Parties

Businesses have evolved because of a need for evolution, and/or because of an evolving internet, mobile technology, increasing demands of ‘new solutions’ from merchants and the need to serve ever-newer cardholder services. Acquirers of yesteryear (banks) did not or could not change with market demands. The types of organisations that have evolved include:

Sales/Introducer organisations

Organisations that ‘sell to’ merchants on behalf of acquirers. Often these ‘take a cut’ of all transactions, and often contractually taking some of the work and the risks.

Technical Gateways

Companies that provide merchants with specialist connectivity / IT solutions in the process; aim to link the merchants to the acquirer akin to an internal IT department for payments. These may include specialist data security and tokenization solutions.

Intermediate Processors – PSPs/ Payment Facilitators

Companies that work with the merchants to process transactions to acquirers, and/or other parties for ‘other’ payment types; adding services that acquirers did not or could not provide. These may be specialisms for particular markets or for particular software or applications. Elements of technical gateways and/or specialist data security and tokenization solutions may be involved.

Acquirer Processors

Companies who will provide the processing services for multiple acquirers, or increasingly, also act as acquirers too; and/or offer ‘white-label’ acquiring solutions/platforms and services.

These are shown in figure 2 – Complications include:

– Many different ‘names’ for parties involved across geographies, by the organisations themselves, through the categorisation of these by the card schemes/ regulators. These names change as the market changes.

– Many of these parties overlap into one another e.g.

  • A sales/introducer may also start to provide equipment or software, a gateway solution, and/or become an intermediate processor themselves.
  • Intermediate processors, may apply for their own acquiring licences to become banks and/or Visa / Mastercard licensed businesses; or set-up or acquire sales businesses.
  • Acquirers may buy or establish intermediate processors, or other parties in the chain and;
  • Technical transaction processors (Gateways) may become sales businesses or provide intermediate processing and/or other services to the merchants.

– Three-party card schemes such as American Express and Diners can also be processed through the different parties involved above, in parallel or separately.

– AliPay and WeChat Pay are making big inroads in Europe, and are now by many reports bigger than Mastercard and Visa and have big ambitions.

– Domestic card schemes operate in many markets across the EU.

– Other payments schemes – electronic money, wallets, digital currencies.

Acquirer intermediates and disintermediation.png
Acquirer intermediates and disintermediation

Challenges

The challenges that arise and cause difficulties include:

a) Bank regulators required Banks to understand, monitor and continually manage all risks involved. The ‘art’ of doing so is being lost as other parties move into acquiring without the same regulation and knowledge.

b) Risks are often not identified, with credit risk largely uncalculated, untracked or ‘priced for’.

c) Customer identification can become diluted when multiple parties are involved; especially when contracts are written without it being clear who is responsible for the risks/exposures; so problems evolve.

d) Regulators and card schemes introduce many and varying rules and requirements that are often hard to understand and to communicate.

e) Capital adequacy / liquidity – banks are always required to manage this; but as non-bank acquirers develop, there is no non-bank regulator to force these business protection solutions with active regulators examining progress.

f) The fallacy that “acquiring is simple”, has led to more ‘new breed’ acquirers emerging with many quickly failing or required to stop trading when things ‘go wrong’.

Common Challenges that must be mitigated

1. Understand a) exposures, b) risk of failure, c) reward for exposures/risks; as well as all the ‘tricks’ used to con acquirers.

2. Have a clear strategy, policy, procedures, documented risk appetite, calculation methodology, management information and reporting structure.

3. Ensure that all card scheme, regulator, AML and other laws and rules are understood, stayed abreast of and corrected when they arise

4. Measure and manage all changes in business models, exposures, risks, management etc.

5. Look for daily / real-time unusual business features and ‘blips’ in the transactions away from norms and then act upon them.

6. Manage and monitor all third-parties employed or delegated-to in the process of card acquiring.

About Riskskill

Riskskill is a leading Europe-based payments and risk management consultancy, with an impressive international track record of helping payments businesses to find and mitigate payments challenges and risks. The firm works with clients to put in place strategies and programmes of work to make payments businesses or functions more profitable, less susceptible to losses, risks and regulatory issues and compliance problems. Riskskill.com is a global GARS Reviewer for Visa.

For further information, please contact: Bill Trueman or Kevin Smith at enquiries@riskskill.com

About Bill Trueman

Bill Trueman is a professional banker and a payments and risk specialist, with over 25 years of experience. He headed-up risk functions and special investigations in Lloyds Bank issuing and acquiring; acquiring and processing at First Data, and then for insurance risks at RBS / Direct Line. For the last 12 years he has been diving-into many other businesses: largely advising merchants, acquirers and others in the payment chain; to reduce risks and costs, and to find improved ways to do business and/or to make significant organisational change. He is a mentor for innovative payments startups and sits on working parties and panels for the UK regulators.

Source: https://www.thepaypers.com/expert-opinion/card-payments-who-am-i-dealing-with-the-parties-involved-are-changing-again-/776837

RiskConnect 2018: The Anatomy of a Good Risk Management Strategy

Webshield Riskconnect Conference 2018 at Frankfurt

Thought leaders and industry experts met at RiskConnect conference in Frankfurt to discuss the newest challenges that risk professionals face within the payments industry and to provide hands-on knowledge they can use in their daily work. RiskConnect is organised by Web Shield, one of the leading onboarding, underwriting and monitoring solution providers.

The event started with a presentation held by Pulitzer Prize winner Carl Bernstein on fake news, the impact this has on our societies and the way truth is perceived via ‘fake news lenses’. Bernstein has preached the gospel of finding ‘the best obtainable version of truth’, stressing the fact that journalists are similar to data miners, permanently searching for info, and that their ultimate role should be connecting these data to offer the best obtainable version of truth. This ideal can be achieved if we present information in context, as simple facts presented isolated from the bigger picture do not cover the truth. A crucial role in this system is played by the validation of our data sources.

He concluded his presentation by drawing a parallel between the role of journalists and risk management professionals, as both categories use similar investigative principles to grasp the whole picture of a given situation / merchant profile, for instance. When you don’t know/suppose you know the truth you face a risk, the risk of missing out the factors that made that truth happen, of not knowing what will be the right consequences, of being part of a distorted world, hence, facing unreal consequences/facts.

What exactly is risk?

There have been a lot of debates around this concept, as it is not a fix, but a variable one, depending on the degree of risk a business/person is willing to accept, the impact the accepted risk has on the business/consumer, risk appetite, the way it makes a business/consumer feel when they take a particular risk etc.. Nevertheless, risk can be monitored/assessed due to ISO 31000 standard on ‘Risk management – Principles and guidelines on implementation’ that states that the process of risk management consists of several concrete steps, such as establishing the context and identifying potential risks and assessment – once risks have been identified, they must then be assessed as to their potential severity of impact.

According to Shaun Lavelle, Senior Vice President Risk, Payment Processing, Paysafe Group and Bill Trueman, Director, RiskSkill (http://www.riskskill.com/) the concept of high-risk is meaningless if the types of risk are not specified. Moreover, the lack of a proper risk scoring analysis can be caused by not taking into consideration operational risk, currency risk, reputational risk, fraud and regulatory risks.

For instance, at the moment there are too many shady merchants under some acquirers’ custody conducting illegal activities, such as child pornography, nutraceuticals, and unfair billing practices causing great fines applied to these acquirers by the regulators/schemes. Not to mention the different perspectives regulators have over these risks and the vast terminology used within this market (that not everyone understands/has consensus over its meaning). Within this context, risk managers plan hard – and put-in place early –warning processes and measures to avoid their business going bust.

Bitcoin, ICOs, crypto… a risky business?

Over the past few years, cryptocurrency has grown exponentially and it seems that a new cryptocurrency pops up every day (currently there are more than 1500 available). The appeal of making a fortune by joining the cryptocurrency market is enticing with mining facilities multiplying and the emergence of “Initial Coin Offerings” (ICOs). Similar with IPOs, ICOs enable startup businesses to raise capital for their projects by issuing their own digital tokens.

However, fraudsters are also exploiting this new digital asset ecosystem. For instance, there are sites that teach you how to launch an ICO in just 20 minutes, or others that through deceiving advertising trick users into thinking that they are buying ‘the next worldwide crypto’ (when actually they don’t receive anything). Also by co-opting well-known brands, such as card schemes – Mastercard, Visa – or by using celebrity names/faces in a deceiving way, ICOs can gather over 30,000 registrants in just a few days, according to the Canadian Financial Authority investigators Annie Leblanc and Maude Blanchette.

The good news is that there are regulators and authorities throughout the world, such as the North American Securities Administrators Association (NASAA), European Securities and Markets Authority (ESMA), Financial Action Task Force (FATF), and many others that monitor these fund raising activities/transactions, investigate any illegal/illicit/deceiving involvement and prosecute where needed.

How to lower the risk?

Mastercard and Visa are preparing their clients/merchants on how to deal effectively with the evolving risk management challenges. During RiskConnect, Jonathan Trivelas, Director, Customer Compliance and Fraud, Mastercard, covered Mastercard’s Business Risk Assessment and Mitigation (BRAM) program and its latest requirements concerning high risks merchants. These initiatives are called AN 1683—Addition of High-Risk Securities Merchants to the BRAM Program and Revised Standards—High-Risk Securities Merchant Registration and AN 1695—Addition of Cryptocurrency Merchants to the BRAM Program and Revised Standards— Cryptocurrency Merchant Registration and apply mainly to cryptocurrency use and chosen high-risk financial instruments trading. This includes recent developments regarding cryptocurrency merchants, high risk security traders (Binary, Forex, etc.), sports betting and high risk negative option billing merchants.

These standards came into effect on October 12th, though discussions around them have been started by Mastercard in spring 2018. Generally speaking, they apply to high risk merchants. It is also worth mentioning that ESMA (European Securities and Markets Authority) has already taken the intervention measures and temporarily prohibited the marketing, distribution or sale of binary options to retail clients. AN 1683 and AN 1695 also aim to provide legal opinions on the possibility of carrying out cryptocurrency business in a particular country.

In a world where anyone can be a merchant, everyone can be a customer, and the regulatory environment continues to extend their enforcement. Another option to lower this risk is to leverage global data points to automate and revolutionise online verifications and fraud prevention.

There are companies such as 4Stop or IdentityMind that, through the power of data, they can achieve automated risk mitigation, even for … cryptocurrency transactions, as technology has the capability to deanonymize an address on the Bitcoin network, thus attaching it to the real world identity of the person controlling it. Once this happens, all transactions made from and to this address become visible and traceable since the beginning of the blockchain and till the very last block.

Education in risk management is crucial

We have the tools and technology, we have the regulations and best practices examples, but how can risk professionals establish a knowledge base in an industry that lacks an established professional educational path and is evolving as quickly as it is? Clearly, by setting industry standards for professionalism and proficiency for the acquiring industry. There are a few associations, companies, groups like Electronic Transaction AssociationWeb ShieldMerchant Acquirer’s Committee that through programs, trainings, book releases, events, and many more are trying to offer new market players the tools to understand the risks associated with financial services.

We cannot but agree with Jason Oxman, CEO, Electronic Transactions Association who says “Through the ETA Certified Payments Professional program, as well as ETA’s new Self-Regulation Program, we are raising the level of education and professionalism in the payments industry, and events like RiskConnect help us increase awareness of the importance of global partnerships.”

We want to take this opportunity to thank the Web Shield team for inviting us for the RiskConnect event and conclude by adding Christian’s Chmiel, CEO&Founder Web Shield remark: “In the fight against fraud, education and collaboration are at least as important as technology”.

Original Source: https://www.thepaypers.com/expert-opinion/riskconnect-2018-the-anatomy-of-a-good-risk-management-strategy/776286

Riskskill Attends 2nd RiskConnect conference – 2018 at Frankfurt

Webshield Riskconnect Conference 2018 at Frankfurt

Riskskill is once again proud to be supporting Web Shield at their second RiskConnect conference – 2018, in Frankfurt.

The networking conference for risk and compliance professionals took place at the Hilton Hotel next to the airport at Frankfurt-am-Main on 29th and 30th November 2018.

RiskConnect a networking conference was hosted by Web Shield, who provide on-boarding, underwriting and monitoring solutions to many in the payments industry.

The two-day conference was attended by thought leaders and payment industry experts to debate the existing and newest challenges faced by the payments industry. Relevant industry developments and challenges are discussed, with opportunities to network with event participants. RiskConnect is the independent event where risk and compliance experts can share their knowledge and broaden their horizons over the topics at hand. so that they can remain ahead of others.

Riskskill is pleased to be supporting Web Shield at this event again. I am talking about the credit risk challenges in the merchant acquiring sector along with Shaun Lavelle, SVP Risk Management at Paysafe Group; we like to support the team from Web Shield as they are doing much to ‘shake-up’ the approach to enhanced risk management, and to improve risk awareness and knowledge in the industry.”

Riskskill is also honoured to be presenting along side a wide range of influential organisations, including senior risk management representatives from both Mastercard and Visa: but also rather pleased to be sharing the stage with Pulitzer Prize winner (and almost a legend in his lifetime: Carl Bernstein.” : http://www.carlbernstein.com

Other speakers include: Brian Kinch from Visa, Jonathan Trivelas from Mastercard, DJ Murphy from Card Not Present, Jason Oxman from the Electronic Transactions Association (ETA), along with speakers from 4Stop, Schiltz & Schiltz, Coinbase, Canadian regulator AMF and the FBI, Deloittes and the Dating Factory.

Riskskill, a boutique payments and risk management consulting company, encourages interested risk and compliance professionals to attend these events as they are a great opportunity to stay in the forefront of industry developments.

Further information on this event is available at http://www.riskconnect.eu

Web Shield RiskConnect Conference 2017: Kevin Smith Also Takes Part

Web Shield RiskConnect event in Frankfurt, Germany in 23-24 November 2017. Web Shield RiskConnect Conference 2017 Focused on Risk Management and Payments Takeaways. Kevin Smith of RiskSkill, presented on Day 1 of the inaugural Web Shield RiskConnect event, held on 23-24 November 2017 in Frankfurt am Main, Germany, he emphasized on the power of networking and information sharing for payments industry risk professionals.

RiskConnect Conference - Risk management and payments takeaways

FRANKFURT, Germany – A well-organised and informative conference held in the Hilton Hotel at Frankfurt Airport in November 2017. It was positioned as the networking event for risk professionals. It really was a superb networking and informative event, an opportunity to meet senior global payment scheme representatives, regulators, acquirers, processors, vendors, industry risk and payment specialists and consultants, and not forgetting our knowledgeable hosts from Web Shield.

Why is this relevant now?

Well, Web Shield in conjunction with Payvision & Acapture have now just released their blog and a YouTube video, summarising the highlights of the event and some thoughts from those who presented and participated in the event, including yours truly.

Web Shield really have challenged the status quo in risk management in payments, through their products and services, technical expertise and knowledge, the training academy and now their networking event and conference.

Supporters and sponsors helped make RiskConnect possible and a success, including Payment Consultants, Payvision, iSignThis, Foregenix and Fibonatix.

Payvision also played an important role of contributing to the event’s success, through their media sponsorship and capturing the two day proceedings on a short video. The seven minute video, summarising the event and engaging with most of the presenters was released on Tuesday, 27th February 2018, along with the Payvision blog.

RiskConnect 2017, was held over two days in November 2017; it brought together a wonderful array of payments and risk management experts. All noted that they may seen as professionals and experts, but all willing to meet a new industry colleague, learn something new and listen to and share industry best practices.

Presenters included senior risk management at the global payment systems, Visa and Mastercard, plus excellent and topical presentations and updates from organisations including Thomson Reuters, Verifi, IWF, HSBC, iSignThis, Vendorcom, the Malta Gaming Authority and the Brunswick and Manitoba regulatory bodies in Canada.

A couple of panel sessions were held that put some of the speakers together on the stage to take questions from the moderator and importantly to take questions from the audience.

Kevin Smith at RiskConnect Conference 2017

Early on Day 1, Kevin Smith representing RiskSkill talked through the challenges affecting the industry and participants, including understanding and managing acceptable risk considering effective risk management in the bigger business picture, and ensuring risk management is viewed as a better business enabler.

Positioned by Web Shield as the networking event for risk professionals, it really did hit the mark“, said Kevin.

Kevin continues….

“This was the first Web Shield conference, building on the success of their training Academy. With an excellent line-up of presenters over the full two-day event, a really good audience of industry professionals eager to learn more, a great location next to Frankfurt airport, and meticulous organisation by Web Shield, it really was a very successful and powerful event. Web Shield have set the bar high for these types of industry event”

Bill Trueman at RiskSkill, added

“RiskSkill has a close business relationship with Web Shield. We were very pleased to be invited to be part of this Web Shield event, and supporting the opportunity to drive greater awareness and education of new as well as existing challenges and developments impacting risk managers in the payments industry. “

“Payvision were an excellent sponsor of the event and pulled together a short video summary of the event. It ha snow been made publicly available and clearly demonstrates the benefits of getting risk management professionals together, excellent networking opportunities and the ability to learn and share best practices.

Last but not least, lets not forget the latest Web Shield book release – The Fundamentals of CNP Merchant Acceptance: Understanding High-Risk Business, 2018 edition. All attendees took away a valuable copy (or more!) of the book, an essential how-to companion for underwriters.

Further details can be located at payvision blog at http://blog.payvision.com/riskconnect-recap-risk-management-and-payments-takeaways/

For full coverage of event watch video https://www.youtube.com/watch?v=fC3_EhiOCG0

Bill Trueman and Kevin Smith are well known and highly trusted specialist in risk review and risk management who works globally independently, are associated with RiskSkill, and AIRFA.

 

In Wake of EMV Switch, US e-Commerce Fraud Soars!

Payments Specialist, Risk Specialist

As the US switched to EMV chip cards system, e-commerce fraud rates jumped by 33% last year, according to Experian. In late 2015 the US finally followed much of the rest of the world when Visa and other card schemes switched the liability for fraud-related losses to retailers that have not upgraded their hardware for EMV.

Experian notes that the increase in e-commerce fraud follows a similar trend pattern from countries that previously rolled out EMV cards – UK, France, Australia, and Canada – that also saw gradual increases in card-not-present fraud.

“We suspect that the EMV liability switch and increased adoption by merchants of chip-and-pin enabled terminals have had a profound impact on driving up e-commerce attacks,” says the firm.

Fraudsters that typically relied on committing counterfeit fraud have shifted their focus to the digital channels where they could have more success, and as more attackers enter a rapidly growing mobile and online commerce space it becomes increasingly difficult for merchants to spot them.

This means that businesses need to expect the increase in e-commerce fraud to continue over time and to be prepared to deal with it by employing a multi-layered approach that pairs transactional data elements with details about the user and their device.

Experian says that the biggest component of credit card fraud trends is the fact that 2016 was a record year for data breaches. There were 1,093 breaches, a 40% increase from 2015, according to the Identity Theft Resource Center.

Meanwhile, the Federal Trade Commission recently revealed a jump in consumers who reported that their stolen data was used for credit card fraud, from 16% in 2015 to more than 32% in 2016.

The record number of data breaches is a signal that future fraudulent activities will take place, warns Experian.

What Bill Trueman, an Eminent Risk Specialist Says About This:

1. Of course e-commerce fraud will rise. It is rising everywhere as e-commerce and m-commerce get used more.

2. Naturally, if you stop fraudsters using cards at the point of sale with EMV, they will move to CNP.

3. If you do not put in protections in your CNP channel, fraud will rise.

4. USA fails to adopt (or plan for) protections in the e-commerce channel.

5. The late adoption of EMV in the USA, has caused a lot more data compromises for longer in this market.

6. EMV adoption is starting to see fraudsters deterred from CO fraud opportunities already as they move to other softer targets.

Bill Trueman is an eminent independent payments and risk specialist helping business and bank owners manage risk & fraud and save millions. He is director of globally well known RiskSkill, and is an active member of a worldwide fraud and risk advisors organization i.e. AIRFA.